Only 51% graduates employable; several challenges in skilling: Economic Survey

The percentage has improved from around 34 percent to 51.3 percent in the last decade

Sixty-five per cent of India’s fast-growing population is under 35, and many lack the skills needed by a modern economy, according to the Economic Survey 2023-24 tabled on July 22 in the Parliament.

It added that estimates show 51.25 percent of the youth is deemed employable – about one in two are not yet readily employable after graduating. However, the percentage has improved from around 34 percent to 51.3 percent in the last decade.

The 2022-23 annual report of the ministry of skill development & entrepreneurship (MSDE) highlights that “as per NSSO, 2011-12 (68th round) report on Status of Education and Vocational Training in India, among persons of age 15-59 years, about 2.2 per cent reported to have received formal vocational training and 8.6 per cent reported to have received non-formal vocational training”.

The report also listed the challenges in the skilling and entrepreneurship landscape such as the public perception that views skilling as the last option meant for those who have not been able to progress/have opted out of the formal academic system.

Further, it said that the skill development programmes of the Central government are spread across more than 20 ministries/departments without any robust coordination and monitoring mechanism to ensure convergence.

“With one of the youngest populations, a median age of 28, India can harness its demographic dividend by nurturing a workforce that is equipped with employable skills and prepared for the needs of the industry. Elevated levels and superior standards of skills help countries adeptly navigate the challenges and opportunities present in both domestic and international job markets,” the Survey said.

Unemployment down

According to Periodic Labour Force Survey or PLFS, youth (age 15-29 years) unemployment rate has declined from 17.8 per cent in 2017-18 to 10 per cent in 2022-23, while other indicators have also improved over time. The rise in youth employment is also reflected in the formal employment figures, as per Employees’ Provident Fund Organisation (EPFO) data.

The annual new EPF subscribers aged 18-28 years have been following an upward trajectory after witnessing a decline during the Covid-19 pandemic. Nearly two-thirds of the new subscribers in the EPFO payroll have been from the 18-28 years band. Thus, youth employment has been rising in tandem with the youth population, the Survey said.

Further, from the gender perspective, the female labour force participation rate (FLFPR) has been rising for six years. While urban FLFPR has also been growing, the rural FLFPR has witnessed a steep rise of 16.9 percentage points between 2017-18 and 2022-23, indicating a rising contribution of women to rural production.

"The unemployment rate has decreased through the years, accompanied by increased participation among youth and females. It is good to see that rural India has played a significant role in boosting female participation, contributing to a notable increase in women transitioning to self-employment. Also, there has been a steady rise in organized sector employment as evidenced from the increasing number of EPFO memberships," said Dr Rumki Majumdar, economist at Deloitte India.

"Keeping up with the momentum will be an important focus for the government as the accelerated growth of AI, specifically GenAI, is poised to revolutionize the nature of work and skills. Amidst these disruptions shaping the future of work, the government will have to prioritise skill initiatives to prepare the workforce of the future," she added.